Weak Dollar

DEFINITION of 'Weak Dollar'

A situation where the U.S. dollar's value is decreasing relative to one or a basket of foreign currencies. Essentially, a weak dollar means that a U.S. dollar can exchange for fewer amounts of foreign currency. The dollar may weaken due to changes in the interest rate and outlook on the U.S. economy's future.

BREAKING DOWN 'Weak Dollar'

Depending on the type of transaction that a party is participating in, possessing a weak dollar is not necessarily a bad situation. For example, a weak dollar may be bad news for U.S. citizens wishing to vacation in foreign countries, but it could be good news for U.S. tourist attractions, as it also means that the U.S. would be more inviting as a destination for foreign vacationers.